P10.3 (LO 1, 3) (Classification of Land and Building Costs) Spitfire Company was incorporated on January 2, 2021, but was unable to begin manufacturing activities until July 1, 2021, because new factory facilities were not completed until that date. The Land and Buildings account reported the following items during 2021. Land and buildings January 31 February 28 $160,000 Cost of removal of building 9,800 May 1 May 1 Partial payment of new construction Legal fees paid 60,000 3,770 June 1 Second payment on new construction 40,000 June 1 Insurance premium 2,280 June 1 Special tax assessment 4,000 June 30 July 1 General expenses 36,300 Final payment on new construction 30,000 December 31 Asset write-up 53,800 399,950 December 31 Depreciation-2021 at 1% (4,000) December 31, 2021 Account balance $395.950 The following additional information is to be considered. 1. To acquire land and building, the company paid $80,000 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $117 per share. 2. Cost of removal of old buildings amounted to $9,800, and the demolition company retained all materials of the building. 3. Legal fees covered the following. Cost of organization Examination of title covering purchase of land Legal work in connection with construction contract $ 610 1,300 1,860 $3.770